Many developing countries are joining the list of top countries for outsourcing, while nations such as Australia, Canada and Israel have fallen off.Take heart, America. Yours isn't the only country to lose jobs to developing nations.

Australia, Canada and Israel, among others, have dropped off the list of best places for information-technology and business-processing services, according to a report that research firm Gartner released Monday.

As more developing countries have created workforces that can handle those tasks at lower cost, Ireland, New Zealand, Singapore and Spain are also no longer on Gartner's list of the 30 best countries for outsourcing, which considers both costs and skill sets.

Meanwhile, Bangladesh, Bulgaria, Colombia, Peru and Mauritius have all joined the list for the first time, while Panama, Sri Lanka and Turkey reappeared after an absence during previous years. Those nations join South American countries, such as Argentina, Brazil, Chile and Colombia, as well as the Asian powerhouses of China and India.

Competition for Outsourcing Grows

The changes reflect the growing trend of cost-cutting via outsourcing, which started with U.S. companies and spread to other parts of the world.

Countries such as Mexico, Chile and Costa Rica have created government programs that boost education and upgrade the domestic labor pool. China and Malaysia, among others, have improved their infrastructure to make them attractive to tech companies. And Brazil's relatively stable government status keeps the country attractive to many different types of companies.

"In this increasingly dynamic global environment, multinational providers will continue to extend their footprint in different geographies, carrying with them their expertise and maturity, while local providers will strive to become offshore providers, searching for opportunities and niches they can explore," Ian Marriott, research vice president at Gartner, said in a statement. "Even though some countries are rated poorly for some categories, clients may find individual providers -- global and local -- whose capabilities mitigate some of the risks."

Where Are the Jobs Going?

Increased outsourcing has hindered the U.S.'s economic recovery and may pose similar problems to other countries that have been bumped off the list.

In November, the U.S. unemployment rate rose to 9.8% from 9.6% in October, with the U.S. private sector adding just 50,000 jobs -- about a third of what analysts had forecast. Additionally, the underemployment rate, which includes both the unemployed and those working part time who are seeking full-time jobs, remained flat at a staggering 17%, while the number of people out of work for at least six months increased to 6.3 million.


The threat of a similar "jobless recovery" means more could be at stake for countries, such as Canada and Israel, that have fallen off the list.

"In the past four decades, American-born workers have faced greater and greater competition from robots, far-away foreigners, recent immigrants and microprocessors," wrote Edward Leamer, director of UCLA'S Anderson Forecast, in a presentation earlier this month. "Technology and international trade have fundamentally altered the demand for skills and have changed the business cycle dynamics."


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